Sir Kenneth Berrill

Sir Kenneth Berrill, who died on April 30 aged 88, was a Cambridge economist
who became a senior government adviser and financial regulator.

Berrill taught economics for 20 years, as a Fellow first of St Catherine's College and later of King's. But he combined teaching with providing advice on economic development to governments such as those of Turkey and Guyana, and to the World Bank and the OECD – and it suited his turn of mind in due course to become a Whitehall civil servant, beginning in 1967 as a special adviser to the Treasury on public expenditure issues. After a spell as chairman of the University Grants Committee, he was appointed chief economic adviser to the Treasury during the turbulent circumstances of 1973.

A year later he was asked to succeed Lord (Victor) Rothschild as head of the Central Policy Review Staff, the Downing Street think-tank which served the prime minister of the day as a sounding board and incubator for new policy ideas.

Shortly after the October 1974 election he presented a report to Harold Wilson's new cabinet which warned of a "dangerously precarious" situation: Britain, Berrill said, faced an epidemic of bankruptcies, rising unemployment, balance of payments deficits spiralling out of control, anti-inflation policies that were doing more harm than good, the risk of a run on the pound, and a "well-nigh hopeless situation" in the nationalised industries.

He was right in almost every respect – but the Cabinet dismissed the report as "based on unduly pessimistic assumptions and [not offering] solutions for the problems it raised".

Despite this rebuff, Berrill and the CPRS team (sometimes referred to as his "young butterflies") went on to develop a wide range of policies for Wilson, James Callaghan and Margaret Thatcher – and in his Stamp Memorial Lecture, shortly after he left Downing Street in 1980, he argued for the creation of a "prime minister's department" to carry on the role in a more formalised way.

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A natural mandarin, calm and affable in manner and highly numerate in his approach, Berrill maintained harmonious relations with senior departmental civil servants despite occasional bouts of controversy. In 1977 he caused deep dismay in the Foreign Office by proposing a radical scaling back of diplomatic expenditure, including the closure of numerous embassies – but again he was rebuffed, this time by Dr David Owen, the Foreign Secretary.

Berrill moved on in 1980 to become chairman of the stockbroking firm Vickers da Costa, but five years later he was recalled to public service as chairman of the Securities and Investment Board (SIB), the precursor of today's Financial Services Authority. There his task was to take the Financial Services Act then passing through parliament and turn it into an effective regulatory structure for the City after "Big Bang", the 1986 reforms that allowed City banks to engage in securities trading on a scale akin to Wall Street.

The assignment exposed him from the start to hostility from market participants, but Berrill relished the power inherent in being a regulator, and set out to create a comprehensive, highly centralised system which left little to market discipline. His City critics said that the rules he created were far too complex, and that in his zeal to maximise "investor protection" Berrill failed to leave room for existing efficient mechanisms for the distribution of savings products.

Hindsight might argue that Berrill's approach to policing the financial sector might have made it a safer place for investors' and depositors' money in the long term, but at the height of the 1980s boom he was out of tune with the prevailing mood. Ministers and Bank of England officials concurred that what was needed was a regulatory system based more on principles and less on rules – and that Berrill could not, in fairness, be asked to take an axe to his own intricate construction. So the task was passed to a Bank of England official, (Sir) David Walker, and Berrill's SIB tenure was not renewed at the end of his three-year term in 1988.

Kenneth Berrill was born in London on August 28 1920 and studied at the London School of Economics before being called up to serve in REME during the Second World War; after demobilisation he went up to Trinity College, Cambridge, to continue his studies in economic history.

He became a university lecturer in Economics in 1949, and studied at Harvard and Stanford on a Rockefeller Fellowship in the early 1950s. At St Catharine's he was also the college bursar – and likewise when he moved to King's in 1962 he followed John Maynard Keynes in the bursar's role, in which, like his distinguished predecessor, he garnered a reputation as a shrewd investor of college funds.

It was through these connections that he was attracted to Vickers da Costa – a firm which counted both his old colleges among its clients and which (under the influence of the King's economist Lord Kaldor) had been one of the first to specialise, profitably for all concerned, in investing in Japanese stocks. It was characteristic of Berrill that he cheerfully sat and passed the Stock Exchange exams before taking up the chairmanship. He was also chairman of Robert Horne, a paper merchant, a director or adviser of a number of investment businesses, and a member of the governing council of Lloyd's of London during its troubled years in the mid-1980s.

An inveterate committee man, Berrill was very active in the affairs of the Royal Economic Society, of which he was a vice-president, and he was chairman of the executive committee of the National Institute for Economic and Social Research.

His other commitments ranged from the pro-chancellorship of the Open University to being a trustee of the London Philharmonic, a member of the UN committee for development planning, an adviser to the Royal College of Defence Studies and a governor of the Administrative Staff College at Henley.

He was appointed KCB in 1971 and GBE in 1988.

Berrill might easily have been mistaken for a schoolmaster, and liked to tell the story of how during the economic crisis of 1973 he dropped into a pub one evening and overheard a discussion of the economic situation. "It's not quite like that," he could not help interrupting, prompting the reply: "And who the hell are you?" "As a matter of fact, I'm the chief economic adviser to the Treasury." "Oh yeah?" came the riposte, "And I'm the Queen of Sheba."

Berrill enjoyed mountaineering in his younger days; sailing, gardening and music were his pastimes in later life.

He married first, in 1941, Brenda West, with whom he had a son, and secondly, in 1950, June Phillips, with whom he had a son and a daughter. He was married for the third time, in 1977, to Jane Marris; she and his three children survive him.